Open Hardware and mobiles.

Now I have been following the travails of two projects for quite some length of time, the first one being the OLPC (One Laptop per Child) project , the other one being Openmoko . While one of the projects seem to have died a premature death, the other one is in a sort of limbo for the moment. Let’s take a moment and see how these two projects compare.

OLPC

OLPC has had a hard time due to most probably managerial issues, as well as some bad choices while choosing partners for hardware components. Mary Lou giving her viewpoint about issues with OLPC . What has been sad to see and know is that good talented people have left or leaving in droves :(

There are number of good points though which have and continue to have commercial as well as social implications in the market place as well as the society .

a. First up is Sugar OS and the sugar interface. As experienced by myself, about a year ago it has some engaging points although still has to go through lot of polish.

b. Second, for the first time mesh networking got wide scope as XO traveled to many places. I am sure this also gave fillip to the various mesh networking projects which are being experimented upon around the world.

c.Third, the amazing screen which has been spinned off into Pixel QI . I really like the mission statement they have put forth, and would love to seem it go into some screens.

d. The idea of child ownership which was one of the founding principles of XO. Its a laudable idea/insight for what was a unique project.

Openmoko

Now about Openmoko, I was disappointed as well as awed when I read about nothing happening on the GTA3 front 8 months back. I used awed as Sean Moss-Pultz, the CEO of Openmoko was so open about the failures and what needs to be done.

Then there were tworenewing mails which came up in June 2009. More good news was to follow up in the GTA02-core list.

If one looks from an outsider perspective, it becomes very clear that there’s huge difference between the cultures that are/were followed in OLPC and Openmoko and some are more ironical then others.

a. while OLPC registered as an non-profit, Openmoko made itself a commercial entity as well as a FOSS project.

b. The openess level of both are astonishing. While OLPC made more blunders, Openmoko has been more forthcoming in its response to various issues.

h. Both are trying to be in niche markets (unfortunately) . While OLPC will do when there are 100 machines or some similar number deployments, Openmoko doesn’t have enough distributors. For e.g. for the whole of India only one:(

Conclusion :- At the end of it, while both projects are at cross-roads, I sense a more upbeat movement in Openmoko rather than OLPC at this point in time.

Update 08/10/09 :- Today I got an e-mail from Rakshat Hooja of IDA systems and this was his answer.

I would like to point out that the Rs 24000/- price is for the the A7 revision of Freerunner not yet being sold by Openmoko itself directly. This includes CST and insured shipping by Bluedart. (The actual cost overheads over our purchase cost from Openmoko of USD xxx include international shipping to India, customs duty, CST and in India shipping). The 24K price pretty much leaves a Rs 800-1000 rs profit that runs our office expenses. None of the workers at IDA even draw a salary let alone monoply profits

the A6 revision is priced at Rs 18000/- (specs are same but there is a buzz on the receivers side on some networks in this revision – there is a hardware fix available for this) and most experienced linux users buy this from us. We purchase this at a USD xxx price from openmoko.

Hope this help to clarify the price of Freerunner in India situation.

Regards,

Rakshat

In the mail I had got he had also shared his real costs . As I asked his permission to use those numbers on the post this was the answer given to me .

Well we cant give out our purchase price from openmoko in a public post as per our agreement (and more importantly as we are negotiating a lower price with them right now). So if you retract those two prices with xxxx rest can be fully quoted.

Rakshat

Now while I’m not entirely convinced by the numbers provided by Rakshat, but even if for a moment let’s say we accept the figures quoted to be true . This gives rise to another set of questions :-

a. If the profits are so low . On 24k if the profits are working out to be Rs. 1000/- then the profit margin is 4.6% . How are they going to service the after-sales service?

In India we have seen one of the most competitive hyper market where margins are thin and volumes is the only way to grow .

b. How do they hope to service customers who are from different cities ?

Lemme give couple of real-life examples from customer perspective.

1. My brother-in-law got some Nokia based smartphone costing around Rs. 15000/- about a year back as a gift from his sister . Now around a month back the LCD screen had broken down. The LCD screen was something like 3″ and he went to few vendors in the city to get it fixed. After scouting around he got it fixed for Rs. 1600/- at one of the local vendors. This incident was of course, after his warranty lapsed.

I have no idea as to how easily the components of Openmoko are or would be available from any of the local mobile repairing shops.

2. I have been trying to send an electronic package to some people in Delhi . The package contents are roughly between Rs. 5000-7000/- . Now unlike before, everybody wants to know what is the package and I don’t want to disclose the contents because :-

a. The contents could be stolen.
b. If I add insurance and other things then it is cheaper to go to Delhi and physically hand over the device.

Talk about being stuck “between a rock and a hard place”

I do one of the problems or hack that the Openmoko is trying to work with. Their problem or problem with any mobile vendor is that the mobile market is a pretty capital intensive as well as distributor and channel oriented market. Things turn around fast. The average life-span of a mobile phone on a shelf is around 6 months from what I read in one of the magazines till it gets replaced by a newer model due to competitive nature of the market itself. Now these guys don’t have the kinds of funds needed and they also don’t want to compromise on the values they have (binary blobs etc.) which are hard to maintain. Both Openmoko and OLPC have been burned by these before as well.

Hence as smartphones don’t necessarily have as much competitive pressures as value and budget phones have maybe they decided this is better strategy.

At the end of the day atleast for Openmoko they would have to hack within the Free market ecosystem and sadly (or not) nobody is sitting idle :)

Related post :- Mobile and me shares my impression of Nokia within the 2 years I had it and where it is today (if I were to try and purchase the same mobile within the same price range ) .

a. We also sell the debug board and other peripherals for the Freerunner at decent margin. Also the profit is better in A6 revision (bulk of our sales right now). Our overall profit margin is more like 8% than the 4.6 you calculated. Openmoko also sends 5% (and sometimes more) devices free of cost for replacement/ after sales support cost. So the situation is not as bad as it appears in your post. In fact we have replaced phones, got them repaired, got buzz fixes and 1024 fixes (which IDA paid for with OM support) applied etc.

b. We use insured shipping by Bluedart and have not lost a single packet till now. In fact customers have requested packets to be diverted and delivery addresses to be changed and it has all worked out. Its also not as expensive as the rates possibly quoted to you. We pay about Rs 500 per shipment (200 for courier and 300 for insurance). Shipping is included in the cost we quote.

There are under 200 Freerunners in India and out of town people courier the device back to us and we cover the return courier charges after repair.

I dont think we looked at the Freerunner as a competitive mobile phone but more as a mobile computer with gsm, gps, wifi, bt, usb host and a VGA screen and the customer makes it into whatever he/she wants it to be. And I never expected it to make a sizable profit for our company. Our simple aim is to stay afloat and make open hardware products available in India.

PS – We also follow a strategy of pricing our products lower for early adopters (as they take the risk with untested hardware with non working software) and then pricing it up to where we make some profit. We initially sold the Freerunners for Rs 15399 at a loss and for the beagle board we loose money on every board being sold at the 8999/- price. But we are here for the long run and look forward to the day when the children of our current customers start purchasing from us.

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Vervearth

Tarot card

You are The Fool

The Fool is the card of infinite possibilities. The bag on the staff indicates that he has all he need to do or be anything he wants, he has only to stop and unpack. He is on his way to a brand new beginning. But the card carries a little bark of warning as well. Stop daydreaming and fantasising and watch your step, lest you fall and end up looking the fool.